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Change Management Strategies and Processes for the successful ERP System Implementation: A Proposed Model

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					                                                                (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                               Vol. 11, No. 2, February 2013

 Change management Strategies and Processes for the
 successful ERP System Implementation: A Proposed
                      Model
                                            Abdullah Saad AL-Malaise AL-Ghamdi
                                              Department of Information Systems
                                       Faculty of Computing and Information Technology
                                                  King Abdul Aziz University


Abstract— Recent advancement in information technology and                     ERP system is the collection of several modules with a
business development, the business organizations turned towards             single and integrated common database that help to integrate
the adoption of advanced information technology systems for                 the business processes in the entire firm and also help to
their organizational setup. Progression of technologies in business         provide the main organizational behaviors in product and
environment has been observed in many organizations by the
                                                                            services (Aladwani 2001). Change management system is a
initiation of enterprise resource planning (ERP) system
implementation. ERP is business integrated information system               system of tools, processes and principals that understanding the
software that attracts the attention of business organizations in           employees behavior and organizational transition from one
order to improve their business processes and achieve the                   state to another state throughout the ERP implementation for
company’s goals. Almost all the ERP system implementation is                the success of an organization to achieve the goal (Al-
based on change management system, where the traditional/                   Mudimigh and Zairi, 2001). ERP systems implementation
legacy system is completely replaced with the new and advance               change the whole setup of an organization by implementing a
system. This paper will discuss the change management strategies            new and advance system therefore it need to be manage very
and processes for the success of ERP system implementation. The             carefully to achieve all the benefits of ERP systems (Al-
paper has proposed a model, change management strategies and
                                                                            Mudimigh et al, 2001). Therefore, it is required to introduce the
processes for the successful ERP system implementation that will
strengthen the scope of the title of this paper.                            change management system to the user to avoid the resistance
                                                                            of users towards the new system (Kemp and Low, 2008).
Keywords-component; Change Management, IT, ERP, User
Reaction, System, Implementation Process
                                                                                               II.   BACKGROUND STUDY
                       I.    INTRODUCTION                                      Change management for a successful ERP implementation is
                                                                            known to be a significant factor (Jing and Qiu, 2007; Zhang et
   Change management system is one of the most common and
                                                                            al, 2003; Kuruppuarachchi et al, 2002; Masa’deh and
critical success factors of ERP implementation (Aladwani,
                                                                            Altamony, 2012; Delone & McLean, 1992; Summer, 1999;
2001; Al-Mudimigh and Zairi, 2001; Schneider, 1999; Al-
                                                                            Kemp and Low, 2008). From the literature it is clear that
Mudimigh et al, 2001; Ngai et al, 2008; Nah et al, 2001;
                                                                            change management provide the user to introduce with the new
Alshamlam and Al-Mudimigh, 2011; Jing and Qiu, 2007). Due
                                                                            system and avoid the user resistance towards the new system
to change management system the old/ legacy systems is
                                                                            and persuade the user behavior towards change (Masa’deh and
replaced with the new technologies and have more effective
                                                                            Altamony, 2012; Kemp and Low, 2008). To adopt the new
than the traditional systems. Although ERP system
                                                                            system and get all the expected benefits, enterprise necessarily
implementation is very expensive and high budget consuming
                                                                            needed to use the change management strategies and process
but the success of its implementation enhance the efficiency of
                                                                            (Ahmed et al, 2006; Kim et al., 2005). (Ahmed et al, 2006)
organizations. (Schneider, 1999) described that ERP projects
                                                                            further explained based on (Summer, 1999) that failure to ERP
are often expensive and almost half of the ERP project failed to
                                                                            implementation observed in several companies due to no
achieve the target of promised benefits. It is evident that ERP
                                                                            serious consideration on soft issues such as business processes
systems implementation is based on the new technologies and
                                                                            and change management. Some researchers pointed out that in
complex in nature, so it is an intricate job for the potential users
                                                                            some organizations the employees and the management people
to handle and operate the new system effectively. Therefore,
                                                                            don’t want to implement the ERP system because they believe
the user objection towards the new system in ERP
                                                                            that the traditional manual system is comfortable to the
implementation based on change management systems is
                                                                            management and the employees (Kuruppuarachchi et al, 2002)
common and observed almost everywhere.
                                                                            so that the change management is having no values to be
                                                                            implemented in the ERP system (Al-Nafjan and Al-Mudimigh,



                                                                       36                              http://sites.google.com/site/ijcsis/
                                                                                                       ISSN 1947-5500
                                                             (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                            Vol. 11, No. 2, February 2013
2011). On the other hand ERP integrate different parts such as           necessary to educate them for the new system through user
shared knowledge cost reduction and business process                     training systems so that to understand the new application and
management improvement of an organization (Alshamlam and                 business processes of ERP system during their work in the
Al-Mudimigh, 2011).                                                      organization (Legare, 2002).          (Aladwani, 2001) further
   ERP system implementation is risky, time consuming and                explained that feedback effective communication is an
expensive task (Alballa and Al-Mudimigh, 2011). In                       important factor in change management to understand the exact
companies survey it is concluded by the (Jing and Qiu, 2007)             problem of user resistance towards the ERP system. Effective
that 44% companies reported that they had spent four times of            communication between the top management to their workers
the software license as much on the ERP implementation                   is mandatory to create the awareness in ERP system and keep
(Alballa and Al-Mudimigh, 2011; Jing and Qiu, 2007). The                 them up-to-date of ERP system’s benefits of ERP system
evidence of failure that is growing towards the ERP packages is          (Alshamlam and Al-Mudimigh, 2011). Although the statistical
due to fitting of organizational and national cultures that lead         figure only 41.6 % reported their usage of feedback through
the projects which are expensive and late in delivery (Zhang et          effective communication has been observed in successful
al, 2003). Furthermore, explained by (Zhang et al, 2003) “two            projects in their change management strategy (Van Hau and
measures are identified as indicators of the dependent variable          Kuzic, 2010).
for the success of ERP system implementation. The success of                Cost minimization is another strategy of change
information system can be measure with six dimensions which              management system (Aladwani, 2001). (Aladwani, 2001) based
are: system quality, information quality, use, user satisfaction,        on (Porter, 1985) described a low cost strategy that can be used
individual impact, and organizational impact” (Delone &                  for a competitive business environment for the organization.
McLean, 1992).                                                           Further they extended that this strategy is a useful suggestion
   Resistance to change in ERP implementation is a                       for ERP where the new system is adopted by the user with the
challenging and never ending task. (Al-Nafjan and Al-                    management approval and the user adoption cost should be
Mudimigh, 2011) described in the case study that during ERP              minimal (Aladwani, 2001; Porter, 1985).
system implementation different change management strategies                Readiness for change is important strategy in ERP
were adopted to deal with the resistance in change by                    implementation because when the employees/users are agree to
communicating the ideas with the users to understand the logic           change so it is a good sign for the top management to
of change (Summer, 1999). To overcome the resistance                     implement the new system and the system will be more useful
problem, the top management has to provide sufficient                    with the readiness of employees willing (Alshamlam and Al-
resources and clear vision of the benefits of ERP to the middle          Mudimigh, 2011; Kwahk and Lee, 2008; Deloitte, 2005; Nah
managements at each department (Alballa and Al-Mudimigh,                 et al, 2001).
2011).                                                                      Strategies used in change management system have been
                                                                         summarized from different sources in the literature as shown in
                                                                         table 1. The order of the strategies is in descending order based
 III.   CHANGE MANAGEMENT STRATEGIES FOR SUCCESSFUL                      on the sources collected from the literature.
                ERP IMPLEMENTATION
   The primary concern of change management is to deal with                        TABLE I.       CHANGE MANAGEMENT STRATEGIES
the people challenges (Aladwani, 2001) and it is evident from            No       Strategies               References                   No. of
the previous work in the literature that soft issues (people                                                                            Source
challenges) are more difficult than the technological issues             1.     for Resistance    (Porter, 1985), (Aladwani,
(Aladwani, 2001; Alballa and Al-Mudimigh, 2011). One of the                                       2001), (Deloitte, 2005),
main issues in change management is the user resistance to the                                    (Kuruppuarachchi et al, 2002),             11
                                                                                                  (Alballa and Al-Mudimigh,
new system (Jing and Qiu, 2007). (Alshamlam and Al-                                               2011), (Nah et al, 2001),
Mudimigh, 2011) pointed out that the user resistance towards a                                    (Summer, 1999), (Ahmed et al,
particular problem should be understand and investigated that                                     2006), (Jing and Qiu, 2007),
how they resist the new system. Furthermore, they explained                                       (Alshamlam and Al-Mudimigh,
                                                                                                  2011), (Kwahk and Lee, 2008).
that some users might be worried about their jobs in the
organization or some user may have lack of technical skills for          2.     for Soft Issues   (Aladwani, 2001), (Alballa and
                                                                                                  Al-Mudimigh, 2011), (Summer,               6
the new system whether to use the new system effectively or                                       1999), (Ahmed et al, 2006),
not.                                                                                              (Jing and Qiu, 2007),
   Project champion in project management is a critical factor                                    (Alshamlam and Al-Mudimigh,
and has a vital role in successfully managing the change                                          2011).
because the champion has a strong influence on the change                3.     Readiness for     (Alshamlam and Al-Mudimigh,                4
                                                                                  Change          2011), (Kwahk and Lee, 2008),
process in the entire organization (Van Hau and Kuzic, 2010).                                     (Deloitte, 2005), (Nah et al,
(Ngai et al, 2008) described that successful and effective                                        2001).
implementation of ERP system needed change management                    4.      Effective        (Aladwani, 2001), (Alshamlam               3
strategies and well build-up culture. Furthermore, to balance                  Communication      and Al-Mudimigh, 2011), (Van
the change and user resistance, user training and education is                                    Hau and Kuzic, 2010).




                                                                    37                                http://sites.google.com/site/ijcsis/
                                                                                                      ISSN 1947-5500
                                                             (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                            Vol. 11, No. 2, February 2013
5.      for Change in   (Van Hau and Kuzic, 2010),                                 TABLE II.           CHANGE MANAGEMENT PROCESSES
          Processes     (Ngai et al, 2008), (Legare,         3
                        2002).                                           No        Processes                     References                 No. of
                                                                                                                                            Source
                                                                                  User Training         (Al-Mashari, 2002),
6.          Cost        (Aladwani, 2001), (Porter,           2
                                                                                                        (Alshamlam and Al-
        minimization    1985).
                                                                          1.                            Mudimigh, 2011), (Aladwani,
                                                                                                        2001), (Nah et al, 2001),                12
7.      User Friendly   (Ngai et al, 2008).                  1                                          (Porter, 1985), (Deloitte,
          Culture                                                                                       2005), (Kuruppuarachchi et al,
                                                                                                        2002), (Alballa and Al-
                                                                                                        Mudimigh, 2011), (Summer,
  IV.   CHANGE MANAGEMENT PROCESSES FOR SUCCESSFUL                                                      1999), (Ahmed et al, 2006),
                ERP IMPLEMENTATION                                                                      (Jing and Qiu, 2007),
                                                                                                        (Kwahk and Lee, 2008),
   The section of the paper is more concern about the tools,              2.   Tools and Methods         (Al-Mashari, 2002), (Deloitte,          4
processes and methods that are using in ERP system                                                      2005), (Alshamlam and Al-
implementation. From the literature, the authors have                                                   Mudimigh, 2011), (Al-
                                                                                                        Mudimigh et al, 2001)
mentioned different tools with different names that were used
during the change management in ERP implementation
                                                                          3.        Helpdesk            Alshamlam and Al-Mudimigh,               4
(Alshamlam and Al-Mudimigh, 2011) some called it change                                                 2011), (Al-Mashari, 2002),
management activities (Al-Mashari, 2002) while some                                                     (Aladwani, 2001), (Nah et al,
mentioned with change management factors (Deloitte, 2005).                                              2001)
(Al-Mudimigh et al, 2001) described that change management                4.     Communication          (Maditinos et al, 2012),                 3
is a set of tools, processes and activities that change the                                             (Fleck, 1993), (Maditinos et
                                                                                                        al, 2012).
organizational setup from the current state to the expected
future state by implementation of ERP systems to achieve the
desired goals of an organization.                                                                 V.    PROPOSED MODEL
   During change in the system effective communication is an
important transition in ERP implementation. According to                 A. Methodology
(Maditinos et al, 2012) effective communication is a                        Methodology of this paper is to discuss the change
trustworthy relationship between the external consultant and             management strategies, techniques, processes and the success
the employees of an organization. Moreover extended that the             and failure of ERP system implementation. Moreover, the
strong communication between the bodies, the more                        methodology has been extended with proposed model to
understanding between them (Fleck, 1993), and the less                   strengthen the contents of change management systems.
communication of consultant to users may lead to destabilize             Proposed model declares the impact of change management on
the ERP system implementation (Wang and Chen, 2006;                      ERP system implementation as shown in figure 3. The focus of
Maditinos et al, 2012).                                                  this paper is more concern on the user reactions against the new
   To ensure effective change in the organizations, user training        system and described in the proposed model.
and other important tools should be adopted for successful
system implementation (Al-Mashari, 2002). Training and re-               B. Model contents
skilling of the IT personnel is an important initiative of change           The contents of the proposed model includes: Change
management (Aladwani, 2001). Employees training aims not                 management strategies, change management processes, change
only to understand and introduce the changes made to the                 management tools, user reactions, user training, user friendly
system or how the new system will be operated but will help              culture, the role of consultants, and top management.
the users to understand that how new system change business
processes of an organization (Alshamlam and Al-Mudimigh,                 C. Model Descriptions
2011; Al-Mashari, 2002; Aladwani, 2001). And for that reason                 As discussed in the previous sections of this paper that ERP
a helpdesk support system should be implemented to aware the             systems are very complex and expensive with high budget and
employees about the changes and post implementation of the               more importantly that is very risky during implementation. Due
system (Nah et al, 2001).                                                to complex nature of ERP systems based on change
   Processes of change management system have been                       management some important critical factors come in front in
summarized from different sources in the literature as shown in          the implementation process. User reaction is one of the critical
table 2. The order of the processes is in descending order based         factors of change management and can lead the implementation
on the sources collected from the literature.                            process to failure if not considered seriously. The reaction
                                                                         against change rise when the strategies, processes and/or
                                                                         techniques of the system change from the existing setup to new
                                                                         system.
                                                                            In this paper we have proposed a change management
                                                                         system success model for the successful ERP implementation




                                                                    38                                    http://sites.google.com/site/ijcsis/
                                                                                                          ISSN 1947-5500
                                                              (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                             Vol. 11, No. 2, February 2013
as shown in figure 3. In the proposed model the user reactions            help them in understanding the new techniques and strategies
against change in change management is an important and                   of the implemented system by providing them training and
critical factor as shown in figure 1.                                     education and user friendly culture to ensure the information
                                                                          flow between them is effectively operating for the success of
                                                                          organization, the scenario is shown in figure 2.




                                                                             Figure 2. User training and education to understand the new system

                Figure 1. User reaction against change                       After the system implementations, the consultants have a
                                                                          dominant role which is consisted of four important factors
   This is the human nature that will never accept any                    including Training and education, user friendly culture,
change/complexity in the system against the systems they are              establishment of helpdesk support center, and effective
using for years. The user reaction towards the new system is              communication to handle the user reaction against the new
one of the three reasons:                                                 system as shown in figure 2. Effective communication between
                                                                          the senior consultant and IT personal help the users to
   Lack of education: In some organizations the employees                understand the complexity in new system and aware the
    are hiring only for the purpose to input the data to the              personnel about the new changes for their convenience.
    system and they don’t care of the people with high                    Establishing a helpdesk support center is another important
    education because the low educated people is hiring with              initiative to grip with the user reaction and ensure the user
                                                                          approval for further advancement in the system and solve their
    minimum salaries.
                                                                          problem on time for their convenience. A user friendly culture
   Lack of computer skills: The low educated people always               is another important factor in ERP system implementation from
    having no expertise in computer programming and having                the top management to provide them with cooperative and user
    no idea how to use the new applications because they learn            friendly culture. It will help the individual to share their own
    some basic packages for their job survival and such people            knowledge for the organization development. The Top
    will never accept the complexity in the system to be                  management is needed to provide the users/employees some
                                                                          encouragement and motivations such as incentives and rewards
    implemented in their organization for the sake of their
                                                                          for their performance. The incentives and rewards system in the
    employment.                                                           organization motivate the individuals involved in the system to
   Comfortable with the traditional system: From the                     improve their efficiency towards their potential work on the
    literature, some authors mentioned that in many                       system for the betterment of organizational outcomes such as
    organizations the employees and even the managers don’t               product and services and the company’s future development.
    like to disturb their old system because they are                     Once the reaction challenge handle and all other factors which
    comfortable with the old/traditional system.                          are not the scope of this paper succeeded, the system will
                                                                          operate accordingly and the organization will get benefited as
   On the other hand, due to the rising benefits of ERP system            the promised befits of ERP outcome.
implementation with advanced technologies is an important
initiative for the organizational development. So the question
arises that how to handle the user reaction? The proposed
model aims to handle the user reaction against the changes
made to the new system by providing them with effective
training and technical education as suggested by most of the
authors in the literature. Training and education help the user to
introduce with the new system and understand them with the
benefits of ERP system for the organizational outcomes. To
deal with the user against their reactions, consultant needs to




                                                                     39                                 http://sites.google.com/site/ijcsis/
                                                                                                        ISSN 1947-5500
                                                              (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                             Vol. 11, No. 2, February 2013
                                                                             Different authors have different views regarding change
                                                                          management system but most of them agreed on some common
                                                                          concepts, processes and techniques. In the literature, almost all
                                                                          the authors described the issue of user resistance and they all
                                                                          agreed that user training and communication between
                                                                          consultant and end users is needed to cope with this challenge.
                                                                          Some authors pointed that user reaction towards change arise
                                                                          due to no sufficient IT or computer skills and they are worries
                                                                          about their jobs while other described that some people are
                                                                          technology enemy (Alshamlan and Al-Mudimigh, 2011), and
                                                                          they never accept the changes in the system and some other
                                                                          authors explained that some people don’t like to disturb their
                                                                          system and they are feeling comfortable with their old systems
                                                                          (Kuruppuarachchi et al, 2002; Al-Nafjan and Al-Mudimigh,
                                                                          2011). On the other hand some authors described that ERP
                                                                          systems are expensive and consuming with high budget so
Figure 3. Proposed change management model for successful ERP             therefore it is out of their budget to implement the change in
implementation
                                                                          their setup. Although, The ERP system has installed in many
                                                                          organizations with successful outcomes exactly what was
                  VI.    CRITICAL DISCUSSION                              promised for the organization and they are running the system
                                                                          efficiently. The people related to the system sharing their own
   In this paper we discussed change management strategies,
                                                                          expertise and creating new knowledge for the system and
techniques, processes and the success and failure of ERP
                                                                          implement it for the success of organizations.
system implementation. A detailed and thorough study survey
                                                                             As shown in figure 3, Change management systems is
has been conducted and analyzed with all approaching
                                                                          successful if the issue of user reactions is handle with strategies
strategies and promising techniques which are discussed in the
                                                                          and provide them with training and educate them about the new
above sections of this paper. The data has been collected from
                                                                          technologies used in the new implemented system. Introduce
different sources including articles, case studies, books and
                                                                          the new system and aware them about the benefits of ERP
online resources. The strategies discussed above clarify the
                                                                          systems for the company outcomes. Re-skilling of IT personnel
vision of the new system implementation that is to be started
                                                                          is another strategy to train them for the new system. Moreover,
with well planed strategies and to avoid all the reactions against
                                                                          the employees should be attracted with some motivational
the new system. The techniques and processes help the bodies
                                                                          resources towards the new system by providing them with user
involved, to understand the system and share their own
                                                                          friendly culture in the organization to share their own tacit
expertise to achieve the company’s goal with the successful
                                                                          knowledge for the improvement of company’s performance. In
ERP system implementation. User reaction towards change has
                                                                          a cooperative culture the top management is needed to
been discussed above and it is known to be the critical issue in
                                                                          encourage their employees with incentives and rewards so that
changing of the existing system. To cope with the reactions
                                                                          the reaction towards the new implemented system is minimal.
challenge towards the new system, user training and education
is an important initiative in change management to provide
them with technological skills and basic computer education by                                   VII. CONCLUSION
arranging training workshops for the users. User reaction
                                                                             ERP is an integrated and business information software
towards change is a human natural obstacle that hurdles the
                                                                          system that attracts the attention of business organizations in
way of changes in the existing system because they are using
                                                                          order to improve their business processes and achieve the
the existing system for years. To handle the issue of reactions,
                                                                          company goals. For that reason, the ERP system should be
an incessant communication between the consultants and the IT
                                                                          more concern on the business processes change than the
personnel is necessarily required to aware them with the
                                                                          technical change during installation. ERP system provides a
advancement in technology and the changes made to system.
                                                                          user friendly culture due to which the individual can share their
An effective communication support system (helpdesk) is an
                                                                          own capabilities for the organization future development.
additional supplement that should be developed by the
                                                                             Change management in ERP system implementation is a
organization to update the users about the new processes and
                                                                          challenging task because the barriers in the form of soft issues
changes made to the system. The system will be more efficient
                                                                          come out when the changes occur to the existing system.
if the user approve the changes made to the system and
                                                                          Change management believes on change, therefore the user
understand the benefits of ERP system. Once the system
                                                                          reaction towards the new system is obviously not new and can
implemented successfully with the user approval and
                                                                          be expected at any stage during ERP implementation process.
understanding, the users will share their own expertise for the
                                                                          To minimize the reactions against the new system user training
best performance of organizational development such as
                                                                          and education is mandatory initiation to introduce the new
product and services.
                                                                          system to the users so that they will understand it and use it




                                                                     40                               http://sites.google.com/site/ijcsis/
                                                                                                      ISSN 1947-5500
                                                                          (IJCSIS) International Journal of Computer Science and Information Security,
                                                                                                                         Vol. 11, No. 2, February 2013
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